Wall Street Braces For Layoffs

Wall Street is bracing for a series of layoffs resulting from mergers in the financial industry.

Citicorp and Nikko Securities Corp. on Thursday confirmed that layoffs are likely in the case of Citicorp and that staff cuts are under way at Japan-based Nikko's New York office. CIBC Oppenheimer, meanwhile, is undertaking a smaller-scale job-cutting plan.

Citicorp officials confirmed a report on the cable channel CNBC that the bank's pending merger with Travelers Group is likely to result in staff cuts at the new Citigroup.

"There is no mandated number, but 5 percent would not be unreasonable for what might happen in 1998," Citicorp spokesman Richard Howe said.

Citicorp employed 93,700 at the end of 1997, and Travelers employed 65,600. Howe said it had not been determined precisely where the ax will hit, but he noted the companies in the past had indicated that most redundancies are in administrative positions.

"When we announced the merger, we announced there would be overlap and obviously we would would have to deal with it, and we've been working on that," Howe said.

Nikko said it's downsizing its bond trading unit in New York as a result of a joint venture with Salomon Smith Barney. Employees at Japanese-owned Nikko told CBS.MarketWatch.com that Nikko began parceling out severance packages at the New York office Thursday morning.

Because of the venture with Salomon Smith Barney, a Travelers Group unit, Nikko said in a prepared release that "many of the activities of Nikko's Fixed Income Division will be rendered redundant."

Brokerage stocks were among the biggest losers on Thursday, with the Amex Securities and Broker-Dealer Index down 5.5 percent.

Staffing cuts at brokerage houses with global exposure are an emerging concern, said strategist Joseph Barthel of Fahnestock & Co. "There's not going to be any more calendars for IPOs and secondaries; that window's been shut," he added. "But it's still relatively early in the game."

Nikko's U.S. operations employ 250 people in New York and Chicago combined, a spokeswoman said. Nikko's main U.S. businesses are in the fixed-income, equities and corporate finance categories.

Nikko declined to reveal how many U.S. employees would be let go as a result of the downsizing. However, Chairman Timothy Cronin said that "Nikko's other businesses, such as Japanese equity trading and sales, will continue to operate as they have in the past."

CIBC Oppenheimer on Tuesday announced internally that 27 employees - most of them traders - would be let go from its mortgage-backed- securities and emerging-markets desks, spokeswoman Deborah Douglas confirmed. The company, a subsidiary of the Canadian Imperial Bank of Commerce (BCM), decided that "we will offer [those services] under our new private-client agency desk," Douglas said.

Wall Street firms have experienced sharp emerging-markets trading losses this year, and the motgage-backed securities business has been especially hard-hit.

CIBC Oppenheimer's activities in the two areas have been no exception.

The losses, which Douglas categorized as "very insignificant" to the company's bottom line, "didn't precipitate [shutting the two desks down], but I'm sure it had an impact."

Written By Emily Church